Forget “made in China” – the country’s a tech leader
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Forget “made in China” – the country’s a tech leader

When you think of the technology sector, South Korea is amongst the first region that comes to mind. Samsung’s smartphones, the fastest internet on the planet, and a basket of innovations that would make any Silicon Valley CEO salivate are all things we think of when the country’s mentioned in the same sentence as ‘technology’.

However, another Asian power with a far less favourable reputation in the tech world is catching up: China. Gone are the days when faulty video recorders stamped with the words ‘made in China’ were the norm – recent statistics point at China being just 6 months behind South Korea when it comes to information technology.

In five years, China will have more-or-less eliminated this lead across most sectors (including smartphones, wearable devices, memory chips, and more), according to a report by state-run think tank Korea Institute for Industrial Economics and Trade.

Kim Hyeon-wook, an economist at SK Research Institute in Seoul, highlighted the need for South Korea’s politicians to play an active role in protecting the country’s industries:

“Of the main industries, it seems Korea has a competitive edge over China only in the semiconductor and display sectors. The government shouldn’t sit back but needs to create a cohesive blueprint that sets the agenda and necessary reforms to move forward.”

However, it is questionable how much of a lead South Korea could maintain against a focused China. The “Made in China 2025” strategy – a stated effort to reclaim a phrase rarely used positively – seeks to push China’s economy beyond labour-intensive work and into more sophisticated sectors, like robotics. Already, China has automated factories and some of the largest and most powerful technology companies in the world.

As Cho Chuel, director of Chinese industry research at Korea Institute for Industrial Economics and Trade said: “China’s improvement of industry is changing the structure of the value chain between Korea and China.” Given that China is the world’s second-largest economy – and by far the largest in Asia – can anyone stop its ascent to new technological heights?

Disclosure

Dominion holds a number of Chinese technology companies, such as Baidu and Tencent, in its Global Trends Managed Fund. Additionally, the opinions in this article do not reflect those of Dominion Fund Management Limited, and in the instance of any forward-looking statements, these should not be construed as advice. 


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